Federal Reserve Interest Rate Cut Expectations

The Federal Reserve are expected to cut the interest rate by half a point, the cut would mean the interest rate is close to historical lows in aid to keep America from plunging deeper into the recession. The decision will be made by policy makers after their two day meeting on Wednesday.

If the cut does happen it would put the federal government’s target for interest banks charge each other on overnight lows not seen since 2004. Before the 12-month period of June 2003 and June 2004 the rate had not been that low for 45 years.

It’s widely believed that the federal government will cut the rate to stop the recession being prolonged and deepening as the financial turmoil continues.

The stocks rebounded on Tuesday after the prospect of an interest rate cut. This comes three weeks after the 0.5 percent cut move that coordinated with several other countries. The Dow Jones industrials average went up by 889.35 points this is the second largest point gain in history.

The cut would also bring borrowing costs down on many business and consumers loans as the banks move fast to match the federal government’s benchmark key lending rate.

Source: AP.google